Cycles Raises $8.7M to Build a Privacy‑Preserving Clearing Network for Crypto Markets

The Problem Cycles Is Trying to Solve

Crypto markets still rely heavily on bilateral settlement, where each trade or payment is settled individually between two parties. This structure can create several problems:

• Large amounts of liquidity must be prefunded to settle trades
• Capital becomes locked in multiple accounts or exchanges
• Counterparty and settlement risks increase during volatile markets

Cycles proposes that many obligations across trading firms, exchanges, and payment flows can be netted against one another before settlement, reducing the amount of capital that must move.

How the Cycles Clearing Network Works

Cycles is designed as an open clearing network that aggregates obligations between multiple participants. Instead of settling each transaction separately, the system calculates net obligations across the network.

This approach—known as multilateral clearing—can significantly reduce the total amount of funds required to settle a set of transactions.

The platform’s architecture combines several technologies:

• Multilateral clearing algorithms: Net obligations across many parties simultaneously rather than settling transactions one‑by‑one.
• Trusted Execution Environments (TEEs): Secure hardware environments used to process sensitive financial data privately.
• Zero‑knowledge proofs (ZKPs): Cryptographic proofs that verify the correctness of clearing results without revealing confidential trading information.

Together, these tools allow participants to confirm that settlements are correct while keeping balances, counterparties, and positions private.

Reducing Liquidity and Settlement Risk

By netting obligations before settlement, Cycles aims to:

• Reduce liquidity requirements: Less capital must be moved or locked as collateral.
• Lower counterparty exposure: Net settlement reduces the number of outstanding obligations between firms.
• Improve capital efficiency: Participants can settle more activity with less working capital.

The broader goal is to address structural inefficiencies in crypto markets where fragmented liquidity and bilateral settlement create operational risk and capital constraints.

Cycles Products

Cycles Prime

Cycles Prime is the company’s institutional clearing product designed for trading firms and market participants. It enables firms to privately net and settle obligations across counterparties without exposing sensitive financial data.

Cycles Pay

Cycles Pay is a payments application for businesses and individuals. Transactions are shielded using zero‑knowledge proofs so sensitive financial details—such as balances and transaction history—remain private while still allowing verification when needed.

Early Partners

Cycles is launching its institutional clearing infrastructure with Lynq and FalconX as anchor partners. These partnerships are intended to help bootstrap participation in the network and validate the clearing model with real trading activity.

Why Clearing Networks Matter in Crypto

Traditional financial markets rely heavily on clearinghouses that net obligations and reduce systemic risk. Cycles is attempting to bring similar mechanisms to crypto markets while preserving decentralization and privacy.

If successful, a multilateral clearing network could allow market participants to settle more trades with less capital, potentially improving liquidity and stability across digital asset markets.